Large V Small Agency Structure

Change has been coming to the agency world for years and it has been accelerated by the recession. Large agencies try to figure out how to do digital, and their approach is typically hire or every possible position. Kind of like when my boss at an old agency hired a VP of analytics, when we didn't have anything to analyze and what I really needed were 4 more Flash people to create the sites. Anyway, the large agency model of checking every box with an in-house resource is not practical or profitable, because the nature of the business is so fluid. Advertisers even tend to use 2-3 digital shops for hat niche expertise - and they should.

Today I came across some research by Second Wind Online called The Small + Smart Agency Model. In brief the two charts represent how big vs. small agencies staff - you can see which is the smarter model.




This is something that I have definitely seen in my journey the last few years, from small to large shops. I believe the smaller shops are best poised for success, since they are staffed with competent old-school big agency people, but are nimble and can make quick adjustments, they do not have the enormous overhead, and they do not have resources in every seat and are more able to leverage the outsourcing model - building a dream team based on the needs of a specific client/project.

Here is an excerpt from Second Wind on the topic:

Here are the steps to follow to attain this Small + Smart Agency status.
1) First, email Jim Hughes at jim@brandestabishment.com. He has a lot of ideas about how to move agencies into the Small + Smart model.
2)Find your core competency. All agencies do particular things exceptionally well. Find those things your agency does well and get even better at doing them.
3) Increase your outsource options. For the other skills you need to fully service clients, you need to increase the number and level of freelancers, strategic partners, virtual employees and consultants you have access to. AND, you need to work on methods to pay them fairly, make money on the deal, lock them in as partners and make sure they don’t bypass you and go directly to your clients.
4) Be competitive. You can compete with ANY agency in the future. All you need is the right mindset and the desire. There are numerous “creative communities”, as well as lots of unaffiliated talent out there—those who have given up working for agencies or companies and want to be independent—enabling you to construct any team, pitch any account and always have the best people ready to do the work for your clients. Let the networking begin…
The Small + Smart Agency is the high quality, low overhead, high capability agency of the future.

I read a whole book dedicated to this topic last year by Seth Godin - "Small is the New Big". The old agency model is broken, as is the old way of doing things in business. It's a brave new world.